Gulke: Get Ready for a Whole New Ballgame

February 21, 2015 03:57 AM
Gulke: Get Ready for a Whole New Ballgame

USDA offered up some interesting numbers in its recent outlooks, taking traders by surprise, and causing prices to dip Friday following a Thursday rally.

The department's forecast for the soybean crop was especially disconcerting, as planted acres were projected at 83.5 million--roughly 4 million less than the trade expected--and ending stocks were raised 12% to 430 million bushels, pushing the season-average price down.

"The thing that I found interesting was with their low soybean acres, they still show a carryover a lot higher," says Jerry Gulke, president of The Gulke Group. "That's kind of scary, because if we did plant 88 million acres, each million acres is another 40 million bushels, and that could be serious for soybeans. They could be underestimating where beans could go if we go ahead and plant the beans this summer."

Across the board, acreage and prices for corn, soybeans and wheat were all projected lower than last year:

  • Corn - 89 million acres, average price $3.50/bu.
  • Soybeans - 83.5 million acres, average price $9/bu.
  • Wheat - 55.5 million acres, average price $5.10/bu.

Read USDA's full report here.

"I guess it's really up to the weather and what us farmers are going to do, because these are not optimistic situations," Gulke says, "The only thing we really have to look forward to from now on is to see if the weather's going to do the trick."

For now, the only other report the market can hang its hat on is USDA's Prospective Plantings report, released March 31.

"And of course as we know, the intentions on March 31 are a far cry from what they sometimes are in October," Gulke says. "But there's nothing between now and then except time and space to try to figure out what happens."

Listen to Gulke's full analysis below:

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Spell Check

Jim Tubbs
Colby, KS
2/22/2015 09:06 AM

  We all have gone through some of the best years in farming ever $7.00-10.00 wheat $5.00-9.00 corn $12.00 beans high cattle high hogs high land prices and if we did not take care of business as this day was sure to come we have no one to blame but ourselves as we made those poor decisions. You all know the old saying please Good LORD give me another chance with making all that money and I will not be foolish with it this time.

Seymour, IA
2/22/2015 08:41 PM

  What's miserable is that some areas in the country such as mine never benefited for the $7 corn and $15 dollar soybeans. When prices sky rocketed we averaged 20 bu. corn and soybeans. 2014 comes around and we produce a record crop for this area which gave us all hope and optimism to rebound from the last two years losses. Then we get smacked right in the face when the average price of corn at the elevator is 3.35 and and soybean in the 9.50 area during and following harvest. With input costs down slightly from what they were when we had record prices computed in with 180 bu. average on corn and 50 bu. soybeans and the harvest prices listed above means any producer in the country that isn't running a 2nd, 3rd, 4th+ generation farm and that has a higher debt to asset ratio due to just getting on their feet is in trouble if things don't change and quick. To add, if the proposals to crop insurance premiums are implemented this year adding salt to the wound our next generation of farmers will be in serious jeopardy unless backed by someone with the money willing to take a hit for the greater good of the backbone of this country (agriculture). From what is playing out here it looks like the government and all our ag suppliers are willing to risk that loss simply to maintain their profits.

Rich Aust
Germantown, TN
2/23/2015 10:27 AM

  I guess this is the reason why the equipment industry is getting ready to be hammered. Already seeing older tractors (the ones you can work on) bringing a premium over what they were in the previous auction season. Smart producers are preparing for the storm.


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